BSE Sanctions Costing U.S. Billions

A study requested by the U.S. Senate Finance Committee shows billions of dollars lost in U.S. export markets due to BSE sanctions.

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The sanctions that countries around the world placed on U.S. beef following the discovery of bovine spongiform encephalopathy (BSE) in the cattle herd in 2003 -- despite being inconsistent with international standards -- cost U.S. cattle ranchers and beef processors billions of dollars in export losses over the four years that followed, according to the U.S. International Trade Commission (ITC).

Bans by Japan and South Korea accounted for most of the export losses, ITC says.

ITC, an independent, nonpartisan federal agency, issued its findings from an analysis of the effects of the animal health and food safety measures major beef export markets took against U.S. beef over the 2003-07 period. The analysis also looked at other trade-distorting measures such as tariffs and tariff rate quotas (TRQs).

The study was requested by the U.S. Senate Finance Committee.

Specifically, the analysis found that bans due to animal health and food safety precautions by Japan, Korea and other countries reduced U.S. beef exports by $2.5 billion to $3.1 billion per year over the four years, according to the ITC report.

Although export sales were offset somewhat by increased sales in the U.S. domestic market, the bans still cost U.S. ranchers and processors $1.0 billion and $1.4 billion, respectively, in lost revenues every year, ITC says.

Losses were greatest in 2004 and declined over the next three years as countries began easing restrictions and as U.S. exporters developed alternative, albeit lower-priced, markets, ITC says.

Furthermore, the effect of the restrictions were greater than the effects of tariffs and TRQs over the period studied, the report said.

ITC says there is "an imbalance" between the extent to which countries impose and relax trade restrictions, as demonstrated by the BSE-related bans where borders were immediately closed but where many countries still have not fully lifted their restrictions.

Japan and Korea are good examples, ITC says. For instance, the World Organization for Animal Health last year declared the U.S. to be at "controlled risk" for BSE, but Japan continues to restrict U.S. beef imports to boneless beef from cattle fewer than 21 months old and Korea to beef from cattle younger than 30 months.

"Removing these barriers must be a top priority" for the U.S. Department of Agriculture and U.S. trade officials, says Sen. Max Baucus (D., Mont.), chair of the finance committee.